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#GE13* PKR questions timing of 1MDB's RM9.1b bond issuance

PETALING JAYA (April 22): Parti Keadilan Rakyat (PKR) has questioned why $3 billion (RM9.1 billion) worth of bonds was issued by 1Malaysia Development Berhad (1MDB) three working days before the dissolution of parliament. "The International Financing Review Asia (IFR Asia) said that the bond issuance was completed on March 29," said PKR Investment and Trade chief Wong Chen at a press conference at PKR headquarters. He said this was a key issue on the "big questionable financial act" by caretaker Prime Minister Datuk Seri Najib Razak, who is the chairman of 1MDB and the caretaker Finance Minister. The mammoth private placement bond is the third in a series by 1MDB and brings the total value of bonds issued at close to RM20 billion, he said. RM5 billion bonds were issued in May 2009 after the strategic development company – which is wholly owned by the Malaysian government – was set up. This was followed by a second $1.75 billion issue in May 2012. Wong questioned the undisclosed terms and "opaque" transactions: "Why were they all done through private placements? Why not launch it publicly, where the pricing of the bonds can be determined more efficiently?" queried Wong. He added that private placements meant the bonds were given to private companies without going through an official public or open medium. Additionally, Wong highlighted that company that arranged for the bond issuance, international investment bank and securities firm Goldman Sachs, had received a fee of $71 million. "They were grossly overpaid by 1MDB," said the corporate lawyer turned politician. "Since it is a company backed by the government, the local banks or arrangers would usually charge a very nominal fee, as it is considered a national duty exercise," explained Wong. Also brought up was the reportedly generous 6.71% coupon rate for the 30-year bond issue from May 2009. Wong expressed his surprise at such an "extremely generous yield" and an unprecedented length for a government guaranteed bond. "At most, 5% would be a very high rate," said the Kelana Jaya parliamentary candidate, highlighting that the average is usually much less. At the press conference, Wong also brought up mysterious investment "whizz kid" Low Taek Jho, who he claimed was involved with 1MDB since its predecessor – the Terengganu Investment Authority – was set up. Wong promised that Pakatan Rakyat (PR) will investigate the above stated issues fully "without fear or favour" if they come to power. But he nonetheless said that the PR government would honour the bonds issued "as a matter of principle".